Which of the following statements is true of a project with a positive net prese

Question

Which of the following statements is true of a project with a positive net present value (NPV)?

The project's internal rate of return is less than the expected rate of return.

The present value of project's cash inflows and multiple cash outflows discounted at internal rate of return are equal.

The project's terminal value is less than the future value of the initial investment in the project.

The project has multiple internal rates of return.

The project's initial investment is recovered on a present value basis prior to the end of the project's useful life.

Explanation / Answer

Answer: The project's initial investment is recovered on a present value basis prior to the end of the project's useful life is true statement because A project should be accepted when its discounted payback period is less than its useful life.

Other points mentioned above are related with negative NPV.

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